Exam 6: The Sources of Growth and the Solow Model

Comparing steady states,which of the following is a result of a permanent increase in the saving rate,but is not a consequence of a one-time increase in productivity?

If depreciation is equal to investment ________.

"Capital dilution" refers to ________.

Strong evidence of convergence exists for ________.

In the Solow model,which of the following is an endogenous variable?

Solow Diagram -On the diagram above,show the quantity of consumption per worker in equilibrium.If the actual capital per worker were greater than k*,would consumption be higher or lower than it is in equilibrium? Describe what would happen in an economy with such a high level of capital per worker.

Evidence of a negative correlation between income per capita and population growth rates ________.

If the contribution from capital growth equals 2 percent and the contribution from labor growth equals 4 percent,then GDP ________.

On the Solow Diagram,an increase in the saving rate is shown by ________.

Solow Diagram -On the diagram above,show the new steady-state capital-labor ratio that results from a decrease in the saving rate.Can you say what has happened to the equilibrium level of consumption per worker?

The loss of capital due to the wearing out of machines is known as ________.

The Solow model implies that continuous growth in productivity at a rate of one percent will result in continuous growth of output per worker at a rate of 1.43%.Thus,if at a point in time output per worker is 270 and productivity rises by one percent,the resulting level of output per worker is ________.

Figure 6.1 -According to Figure 6.1,the period from 1996 to 2011 is particularly remarkable for the rapid growth of ________.

If an economy initially starts away from the steady state ________.

Which of the following is the most difficult to measure? Changes in ________.

Figure 6.1 -According to Figure 6.1,the average annual rate of growth of the U.S.economy in the period 1996-2011 equalled ________.

In theory,differences in output across economies and over time might be the result of differences in either capital input,labor input,or productivity.The evidence points clearly to productivity as a more likely and powerful source of growth differences.Which aspects of the Solow growth model help to explain why the inputs of capital and labor contribute little to growth of output,relative to productivity?

A higher rate of saving at the national level will,in the long-run ________.

Figure 6.1 -According to Figure 6.1,the period from 1974 to 1995 is particularly remarkable for the slow growth of ________.

Given the production function Y = A and fixed values for the saving rate and depreciation,if productivity is growing at an average rate of three percent,and the labor input grows at two percent,there is a unique growth rate of capital that is sustainable.That is,if the growth rate of capital is either higher or lower than this steady-state value,then it must eventually change,even if nothing else in the economy changes.Calculate this steady-state growth rate of capital,and explain why it alone is a sustainable rate.[Hint: Use the fact that the growth rates of output and capital per worker are 43% higher than the growth rate of productivity.]